In a move to transform Nigeria’s economy and energy sector, UTM FLNG Limited, the developer of Nigeria’s first floating liquified natural gas facility, has targeted the fourth quarter of 2024 to achieve a Final Investment Decision (FID) on its floating liquefied natural gas project.
This strategic investment promises to enhance energy security by reducing gas prices, bolstering foreign exchange earnings, creating job opportunities, and driving GDP growth for Africa’s fourth-largest economy.
“This development pushes us further into meeting our potential in the decade of gas. The facility will increase forex inflow into the country, increasing supply and strengthening the naira. The liquefied petroleum gas (LPG) produced will boost clean cooking adoption and reduce our need for forex for LPG imports,” Oreoluwa Owolabi, partner at Mach Advisory, said.
“I envision that its success will influence further investments in gas utilization, which is essential in ensuring the Presidential CNG initiative is successful and reducing Nigeria’s carbon footprint from transportation.”
Julius Rone, the managing director and chief executive officer of UTM FLNG, has assured that the company has laid out all processes to ensure a smooth take-off and targeted production capacity of 2.8 million metric tonnes per annum by the fourth quarter of 2028.
“Our Company is set for FID before the end of this year, and on completion, in Q4 2028, it will have a production capacity of 2.8 million metric tonnes of natural gas, 450 metric tonnes of LPG, and other liquids per annum for export and domestic consumption.”
Rone said this development is a huge step that will leapfrog the economy by ensuring gas availability at a lower cost for household, automobile, and industrial use. “It will also generate massive employment and multi-million Naira business opportunities for Nigerians.”
Energy security stands to benefit significantly from this project. By diversifying Nigeria’s energy mix and increasing the availability of natural gas, the country can reduce its reliance on oil, mitigate supply disruptions, and enhance energy stability.
This development would, in turn, hedge against the volatile prices of crude oil. This is particularly crucial as global energy markets face increasing volatility and the need for sustainable energy sources grows.
Gas resources are a crucial driver of economic growth and development for Nigeria, with nearly 209 trillion cubic feet (TCF) of natural gas reserves, the ninth highest in the world. The FLNG project, if executed correctly, is poised to generate substantial export earnings due to Nigeria’s abundant natural gas reserve.
LNG is in high demand worldwide, and Nigeria’s entry into this market opens new revenue streams. According to Shell LNG Outlook 2024, “Global demand for liquefied natural gas (LNG) is estimated to rise by more than 50 percent by 2040, as industrial coal-to-gas switching gathers pace in China and South Asian and South-east Asian countries use more LNG to support their economic growth.”
The oil giant added that global trade in LNG reached 404 million tonnes in 2023, up from 397 million tonnes in 2022, with tight supplies of LNG constraining growth. This is an opportunity Africa’s fourth largest economy cannot ignore, as increased export earnings will contribute to a more robust trade balance and strengthen the nation’s financial position on the global stage.
The economic impact extends to GDP growth. The FLNG project is expected to create numerous jobs across various sectors, from construction and engineering to operations and logistics. Additionally, the influx of investment and improved energy infrastructure will stimulate economic activities and foster industrial development.
Ayodele Oni, energy partner at Bloomfield Law Practice, said that the development of the UTM FLNG facility holds great promise for Nigeria and its citizens as it would catalyze Nigeria’s economic growth.
“An FLNG facility by its nature would facilitate Nigeria’s ability to export liquefied natural gas without the need for elaborate onshore infrastructure. The ease created by such exports would be reflected in Nigeria’s foreign earnings. Thereby boosting our economy, trade, and payment balance,” the energy expert said.
Ayodele Oni added that it is critical to have comprehensive environmental and safety measures and policies in place to prevent potential oil spills or leaks and, if they do occur, effective remediation plans for the affected areas.
“It is also key to ensure that the logistics of the required transportation networks and ports is adequately considered, as it is important for the overall success of the UTM FLNG facility project,” Oni said.
For Joshua Olorunmaiye, legal advisor on energy and natural resources, projects, and infrastructure at Banwo & Ighodalo, the UTM FLNG is certainly a big deal for the industry, considering that we have been and continue to be in dire need of intensive infrastructural development, especially in relation to gas development.
“We already know Nigeria has plenty of natural gas reserves. However, the challenge remains how this enormous resource can be developed and utilised for the greater good of our nation. I see it as a great opportunity that will cut across different spheres such as domestic gas availability, technology transfer, local content and capacity development, and even Nigeria’s clean energy commitments,” Olorunmaiye said.
“This is so because FLNGs offer fast, commercially attractive, and environmentally sustainable solutions for monetising offshore stranded gas fields and associated gas.”
Regarding challenges, Olorunmaiye said it would be expected that the usual technical concerns would arise, such as offloading, the technical ability to modularize, operability, and safety. “All of these can certainly be handled by ensuring that the best technology and equipment are deployed and that the personnel carefully pay due attention to the different dynamic situations that arise per time,” the energy lawyer said.
